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Traders and steel mill sources told Steel First that Anglo and Nippon Steel & Sumitomo Corp (NSSMC) were in discussions but were yet to reach an agreement, as of June 20.

“Everyone expects them to settle at levels $1-2 per tonne above the second quarter,” a European trader said.

Anglo settled the second quarter 2014 hard coking coal benchmark at $120 per tonne fob Australia, for its German Creek premium product.

July contract prices were reported to have been concluded at $123 per tonne fob for Anglo’s premium hard coking coals.

“If they conclude under the second-quarter level that means that even more miners are going to be in trouble,” a producer commented.

BHP Billiton Mitsubishi historically led the market in being the first miner to settle contract prices with Japanese steel mills, which have largely adhered to the long-standing benchmark pricing system despite a large proportion of the market turning to monthly or spot pricing.

Neither Anglo American nor Nippon Steel returned requests for comment at time of publication.

Seaborne spot coking coal prices have been depressed by market oversupply and a slowdown in Chinese buying.

The low pricing climate has already prompted the closure of several higher cost US coking coal mines, while Australian producers have slashed jobs but maintained output at high levels.

Steel First’s premium hard coking coal index fob Australia was calculated at $114.49 per tonne on Friday June 20, down from just under $135 per tonne at the start of the year. Prices reached lows of under $110 per tonne at the end of March.

Sources said they expected Anglo and Nippon to conclude third-quarter settlement talks in the next fortnight.